$60M Case v. Kaiser Alleges Risky Transfers

LOS ANGELES, Calif. (CN) - Kaiser runs a scheme to avoid paying for out-of-network emergency care and pressures doctors to release patients to Kaiser hospitals before they are medically stable, a health care system claims in a lawsuit.

Thirteen hospitals in the Prime Healthcare system sued Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and Southern California Permanente Medical Group, in Los Angeles County Court, alleging the health system is running a scheme aimed at avoiding payment of out-of-network patient care.

All California hospitals must care for patients in emergency situations regardless of their healthcare plan, under state and federal law, and prime is no exception.

Yet, "KFHP regularly refuses to pay the Prime Hospitals' bills for treating its members; interferes with and challenges the treating physicians' determinations about KFHP members' medical conditions; exerts economic and other pressure on treating physicians to coerce them to agree to transfer patients despite their better judgment; harasses and pressures patients and their families to request transfers from Prime Hospitals for economic reasons; and puts economic pressure on hospitals, including the Prime Hospitals, by threatening non-payment if the hospitals do not ensure that KFHP members are transferred when Kaiser demands that they be, regardless of the treating physicians' opinions and conclusions," according to the 38-page complaint. "All this is done so that patients can be 'repatriated' to a Kaiser facility and treated there for the financial benefit of KFHP."

Prime says it sued Kaiser in 2008 and 2010 for non-payment of services provided to KFHP members. Those cases are currently pending. Prime claims Kaiser most recently owes it $60 million for services provided to KFHP members beginning Jan. 1, 2013 to present.

According to Prime, Kaiser runs its scheme through its Case Coordination Center, which is comprised of Southern California Permanente Medical Group physicians, nurses and other employees who set up policies and procedures to bring patients back to Kaiser facilities.

"The CCC primarily uses two groups who aggressively seek to 'repatriate' KFHP members to defendants' hospitals: the Emergency Prospective Review Program, which communicates with physicians, hospital staff, patients and their families when KFHP members are being treated in non-Kaiser emergency departments; and the Outside Utilization Resource Services Department," for regular hospital care.

Prime says Kaiser's policies and procedures "create a medical hazard" in its effort to avoid paying its bills and often retaliates against Prime hospitals for refusing to transfer unstable Kaiser patients.

Specifically, physicians from Prime hospitals who contact Kaiser about a patient are routed to CCC personnel specially trained to pressure physicians into agreeing that patients are stable enough for transfer.

Kaiser also requests medical records for almost 100 percent of claims submitted by Prime, often requesting records multiple times, to harass Prime staff and delay valid payment claims, according the complaint.

"Defendants began denying plaintiffs' claims for inpatient services that the Prime Hospitals provided to stabilize KFHP members and/or to maintain their stable conditions on the purported basis that the Prime Hospitals had not contacted Kaiser's Emergency Prospective Review Program before admitting the patients for further stabilizing care, even though the Prime Hospitals had no legal or other duty to do so," the complaint states.

Prime sued Kaiser for breach of contract, breach of implied covenant of good faith and fair dealing, breach of implied-in-law contract involving commercial claims, breach of implied-in-law contract involving Medicare Advantage Claims, open book account and violation of California's Unfair Competition Law. The company seeks damages, statutory penalties and attorneys' fees.

Jeffrey Isaacs and Jerome Friedberg of Isaacs Friedberg & Labaton, in Los Angeles, are the lead attorneys in the case. Also representing the plaintiffs is Stephen Goff, Marcia Augsbuger and Devan McCarty of DLA Piper, in Sacramento; and Mark Hardiman and John Mills of Nelson Hardiman, in Los Angeles.

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